Obama unveils $447bn US jobs plan
President Barack Obama warns the United States is in a “national crisis” as he outlines a $447bn package of tax cuts and government spending in a bid to jump-start the sluggish US economy.
The package of measures, designed to reduce America’s 9.1 per cent unemployment, will be critical to Barack Obama‘s prospects for re-election in 2012.
The president’s poll numbers hit new lows this week as he desperately searched for measures to re-start the world’s biggest economy in the face of voter frustration and fears of a double-dip recession.
“Those of us here tonight can’t solve our nation’s woes. But we can help,” he said in a nationally televised prime-time speech.
“We can make a difference. There are steps we can take right now to help people’s lives.”
Mr Obama still faces a battle with his Republican enemies in Congress to pass his rescue measures. But in a swipe at those who have delayed other economic booster plans – and last month pushed the US to the brink of default – he said it was time to “stop the political circus and actually do something to help the economy”.
Tax cuts, jobs boost
The president said that his jobs plan would cut taxes for workers and businesses and get more construction workers and teachers into work through infrastructure projects.
Those of us here tonight can’t solve our nation’s woes. But we can help. President Barack Obama
“It will provide a tax break for companies who hire new workers and it will cut payroll taxes in half for every working American and every small business,” he said.
President Obama said his proposed plan would “provide a jolt to an economy that has stalled and give companies confidence that if they invest and hire there will be customers for their products and services.”
Officials estimate that his “American jobs act” will cost $447bn, which the president says will be offset by cuts elsewhere.
“What you come down to is that there is no silver bullet, no magic bullet that this president or anyone can propose that would drive unemployment down to 5 per cent in the next year,” said Joel Prakken, chairman of Macroeconomic Advisers, an economic modeling firm in St. Louis.
“It has to come from the private sector and for that you have to work through the overhang from the housing crisis that is suppressing aggregate demand,” he said.
Roadblocks to recovery
The plan includes extending unemployment insurance at a cost of $49bn, modernising schools for $30bn and investing in transport infrastructure projects for $50bn.
But the bulk of the president’s proposal was made up of $240bn in tax relief by cutting payroll taxes for employees in half next year and trimming employer payroll taxes as well.
“These payroll tax reductions are the proposals that have the greatest chance of getting passed by Congress because it will be harder for Republicans to vote against proposed tax cuts,” said Paul Ashworth, chief U.S. economist for Capital Economics.
In a speech interrupted by applause from his fellow Democrats – while Republicans sat mostly in silence – the president said it was time for action after a slew of poor economic data. His rivals believe the timing also has something to do with the 2012 US elections, but they too are under pressure not to reject the proposals outright and face being labelled as the roadblocks to recovery.
“You should pass this jobs plan right away,” the president said.